A recent piece in Barron’s covers the TIAA-CREF Large-Cap Growth Fund (TIRTX; Retail Class shares). This $5.2-billion no-load, large-cap growth fund has an attractive 0.76% expense ratio but a relatively high 94% turnover. According to the article

Over the past year, the fund’s 36% return has outpaced 89% of its large-cap growth peers […]. The fund’s nearly 17% average annual return over the past five years has beaten 82% of peers.

The fund’s prospectus benchmark is the Russell 1000® Growth Index. One of the accessible and efficient implementations of this index is the iShares Russell 1000 Growth ETF (IWF). Alpholio™ calculations show that since inception the fund returned more than the ETF in approximately 48% of all rolling 36-month periods, 44% of 24-month periods and 42% of 12-month periods. The median cumulative (not annualized) underperformance over a rolling 36-month period was 0.46%:

The rolling returns comparison determines a relative performance of the fund over typical holding periods. However, it ignores the volatility and exposures of the fund. To gain more insights into these aspects, let’s employ Alpholio™’s patented methodology. The simplest variant of this approach constructs a fixed-membership and fixed-weight reference ETF portfolio that most closely tracks periodic returns of the analyzed fund. Here is the resulting chart with statistics of the cumulative RealAlpha™ for TIAA-CREF Large-Cap Growth (to learn more about this and other performance measures, please consult our FAQ):

To make the implementation practical, in the above analysis the number of ETFs in the reference portfolio was limited to three. Overall, the fund added virtually no value over its reference portfolio of comparable volatility.

The following chart with associated statistics shows the static composition of the reference ETF portfolio:

Although not statistically significant (t-statistic much smaller than two), the negative alpha intercept indicates that the fund failed to outperform the ETF on a risk-adjusted basis.

The final chart with related statistics depicts the cumulative total (i.e. with reinvested distributions) return of the fund and its benchmark ETF:

The fund underperformed the ETF according to all traditional measures.

In sum, despite a competitive expense ratio, the actively managed TIAA-CREF Large-Cap Growth Fund failed to substantially outperform its passive benchmark ETF or its reference ETF portfolio. In addition, over the past five years the fund produced considerable capital gain distributions, which made it less suitable for taxable investment accounts.

To learn more about the TIAA-CREF Large-Cap Growth and other mutual funds, please register on our website.

[the fund] has returned an average of 11.3% annually over the past five years, better than 90% of its peers.

The current manager took over the fund in January 2008. Therefore, all of the following analyses will that month.

The prospectus benchmark for the fund is the MSCI All Country World Ex-US Index. (This benchmark is not perfect, as the fund currently has about 13% of assets in domestic equities.) One of the accessible implementations of this index is the SPDR® MSCI ACWI ex-US ETF (CWI). Alpholio™ calculations indicate that through September 2017, the fund returned more than the ETF in 99% of all rolling 36-month periods, 96% of 24-month periods and 80% of 12-month periods. The median cumulative (not annualized) outperformance over a 36-month period was 17.4%.

A rolling returns comparison does not account for the fund’s exposures or volatility. This is where Alpholio™’s patented methodology can provide additional insights. The simplest variant of this methodology constructs a reference portfolio with fixed ETF membership and weights, which most closely tracks periodic returns of the analyzed fund.

To facilitate an easy substitution, the number of ETFs in the reference portfolio was limited to three in this analysis. Here is the resulting chart with related statistics of the cumulative RealAlpha™ for the Fidelity International Capital Appreciation (to learn more about this and other performance measures, please visit our FAQ):

The fund cumulatively returned 8.6% less than the reference portfolio and did so with a higher volatility, measured as the standard deviation of monthly returns.

The following chart with associated statistics depicts the constant composition of the reference ETF portfolio for the fund:

The following chart with statistics demonstrates the capital asset pricing model (CAPM) of the fund with respect to the dominant ETF in the reference portfolio:

After adjustment for risk, the fund produced a substantial positive alpha. Although this alpha was economically significant (t-statistic of 1.44), it was not statistically significant (t-statistic below two). While this simple model implies a good fit between the fund and the ETF (high R-squared), it only employs a single explanatory variable.

The final chart with statistics shows the traditional measures of performance of the fund and its reference ETFs:

The high-growth equivalent position in FDN counter-balanced the lower-growth positions in EFG and WPS to produce a reference portfolio closely resembling the fund.

In sum, under current management the Fidelity International Capital Appreciation Fund could be effectively replaced by a fixed-weight portfolio of just three ETFs. (A larger number of ETFs in the reference portfolio would produce an even closer substitute, albeit at the expense of higher complexity.) The relatively high turnover of the fund was likely responsible for considerable capital gain distributions in three out of the last four years, which made the fund less suitable for taxable accounts.

To learn more about the Fidelity International Capital Appreciation and other mutual funds, please register on our website.

A recent piece in Barron’s features the Alger Small Cap Focus Fund (AOFAX; Class A shares). This small-cap growth fund has a 5.25% maximum sales charge, 1.20% net expense ratio and 76% turnover. According to the article

The now $537 million fund has returned an average of 10.9% a year over [the current manager’s] tenure, better than the 8.7% for the Russell 2000 Growth index.

The current manager took over the fund in mid-February 2015. Therefore, the following analyses will cover the period from March 2015 onward.

The fund’s prospectus benchmark is the Russell 2000® Growth Index. One of the investable implementations of this index is the iShares Russell 2000 Growth ETF (IWO). Alpholio™ calculations indicate that the fund returned more than the ETF in 75% of all rolling 12-month periods with a median cumulative (not annualized) outperformance of about 2.2% per period:

The rolling return comparison assesses the fund’s relative performance over a holding period but does not take into account its exposures or risk. To gain insight into the latter, let’s apply the simplest variant of Alpholio™’s patented methodology. This approach constructs a reference ETF portfolio whose periodic returns most closely track those of the fund. Both the membership and weights of ETFs in the reference portfolio are fixed over the entire evaluation period. To make replication practical, the membership of the reference portfolio cannot exceed a preset number of ETFs.

Here is the resulting chart of cumulative RealAlpha™ for Alger Small Cap Focus (to learn more about this and other performance measures, please visit our FAQ):

The fund underperformed its reference portfolio of up to six ETFs: it returned less and with higher volatility. (A limit of six ETFs was used to arrive at a more complete picture of the fund’s exposures. Even when the reference portfolio contained just two or three ETFs, the outcome was similar.)

The following chart with statistics shows the constant composition of the reference ETF portfolio:

Finally, let’s examine the risk-adjusted performance of the fund against it dominant equivalent position, IWO, using a traditional model:

The CAPM reveals that although the fund generated a positive alpha vs. the ETF, this intercept was not statistically significant, i.e. its t-stat was well below two. Please keep in mind that this simple, single-factor model does not fully adjust for the fund’s risks.

Under current management, the Alger Small Cap Focus Fund did not add value when compared to its reference ETF portfolio. The fund’s steep front load further detracted from its appeal. The fund currently has only 49 positions, concentrated at about 40% each in the health care and information technology sectors. The P/E and P/B ratios of the fund are approximately twice those of its benchmark index, which suggests that the fund may be highly susceptible to a market correction.

To learn more about the Alger Small Cap Focus and other mutual funds, please register on our website.

… fared well more recently, returning 21% over the past year, beating 86% of its peers, according to Morningstar. Over the past three years, its average annual return of 9% beat 85% of peers.

The primary benchmark for the fund is the S&P 500® Index. One of the long-lived and accessible implementations of the index is the SPDR® S&P 500® ETF (SPY). Alpholio™ calculations show that over the 15 years through 2016 the fund returned more than the ETF in approximately 34% of all rolling 36-month periods, 32% of 24-month periods and 38% of 12-month periods. The median cumulative (not annualized) underperformance over a rolling 36-month period was 5.9%.

The secondary benchmark for the fund is the Russell 1000® Growth Index. One of the popular implementations of this index is the iShares Russell 1000 Growth ETF (IWF). Alpholio™ calculations indicate that over the last 15 years the fund returned more than this ETF in about 30% of all rolling 36-month periods (with median underperformance of 5.3%), 32% of 24-month periods and 40% of 12-month periods.

A comparison of rolling returns is useful in determining a fund’s performance over average typical holding periods. However, it does not account for the fund’s volatility or exposures to particular market capitalizations, styles, sectors, industries, regions or countries. To gain insight into the latter, let’s employ Alpholio™’s patented methodology. In the simplest variant, it constructs a fixed-membership and fixed-weight reference ETF portfolio that most closely tracks periodic returns of the analyzed fund. To make a potential substitution of the fund more practical, in all of the following analyses the number of ETFs in the reference portfolio was capped at six.

Here is the resulting chart with statistics of the cumulative RealAlpha™ for Jensen Quality Growth over the last ten years (to learn more about this and other performance measures, please visit our FAQ):

The fund subtracted value compared to its reference ETF portfolio that had a similar volatility, measured as the standard deviation of monthly returns. The fund’s RealBeta™ was below that of a broad-based equity ETF.

The following chart with related statistics illustrates the fixed reference ETF portfolio for the fund over the same analysis period:

The following chart with associated statistics depicts the cumulative RealAlpha™ for the fund over the last five years:

With just 0.21% of cumulative excess return, the fund failed to substantially beat its reference ETF portfolio that had a slightly lower volatility. The fund’s RealBeta™ was somewhat higher compared to that over the longer analysis period.

The following chart with accompanying statistics presents the constant composition of the reference ETF portfolio over the same evaluation period:

The final chart with conventional performance statistics shows the total return of the fund vs. that of the aforesaid SCHD and SPHQ (the analysis timeframe was determined by the inception date of SCHD):

Either ETF outperformed the fund in terms of the higher annualized return, alpha, Sharpe and Sortino ratios, as well as the lower beta and standard deviation of monthly returns.

In sum, the Jensen Quality Growth Fund did not substantially outperform its respective reference ETF portfolios over the standard ten-, five- and three-year evaluation periods. The fund could have easily been substituted, and with better results, with either of the two ETFs picked from its reference portfolios. Despite a low turnover, in the past four years the fund had significant long-term capital distributions, which made it less suitable for taxable accounts.

To learn more about the Jensen Quality Growth and other mutual funds, please register on our website.

This weekend’s piece in Barron’s features the Amana Growth Fund (AMAGX; Investor Class shares). This $1.5 billion no-load fund invests according to principles dictated by the Islamic faith, has a competitive 1.09% expense ratio and the lowest possible 0% turnover. According to the article

In the past 15 years, the large-cap growth fund returned 8.3% annually, beating the S&P 500’s 6.7% and 96% of its large-growth fund peers

The prospectus benchmark for the fund is the S&P 500® Index. One of the long-lived and efficient implementations of this index is the SPDR® S&P 500® ETF (SPY). Alpholio™ calculations show that from January 2000 through September 2016 the fund returned more than the ETF in about 60% of all rolling 36-month periods, 54% of 24-month periods and 49% of 12-month periods. The median cumulative (not annualized) outperformance over the rolling 36-month period was 8.1%.

While a rolling-returns analysis provides useful insights into performance over typical holding periods, it does not take the fund’s return volatility or exposures into account. This is where Alpholio™’s patented methodology can help. Its simplest variant constructs a fixed-membership and fixed-weight reference ETF portfolio whose periodic returns mimic those of the fund as closely as possible. The difference between the cumulative return of the fund and that of its reference ETF portfolio is the cumulative RealAlpha™ (to learn more about this and other performance measures, please visit our FAQ). To make substitution of the fund with ETFs practical, in all subsequent analyses the maximum number of ETFs in a reference portfolio was set at four.

Here is a chart with related statistics of the cumulative RealAlpha™ for the Amana Grwoth Fund over ten years through September 2016:

Despite the positive 13.9% peak in February 2011, the fund produced a negative 12.9% of cumulative RealAlpha™ overall. The volatility of the fund, measured as the standard deviation of monthly returns, was approximately 0.35% higher than that of the reference ETF portfolio. The fund’s RealBeta™ was noticeably lower than that of a broad-based domestic equity ETF.

The following chart with associated statistics depicts the static reference ETF portfolio for the fund over the same analysis period:

The following chart and statistics present the cumulative RealAlpha™ for the fund over the three-year period through September:

The fund briefly generated 1.3% of positive cumulative RealAlpha™ in March 2014, but ended up with a negative 5.6%. The volatility of the fund remained a bit above that of its reference ETF portfolio. The RealBeta™ was slightly elevated when compared to values in the previous two evaluation periods.

The following chart and statistics show the constant composition of the reference ETF portfolio for the fund over the same three-year period:

The final chart compares the long-term total return and traditional performance measures of the fund to those of dominant ETFs in its reference portfolios:

As measured by the Sharpe and Sortino ratios, the fund had slightly better risk-adjusted performance than VIG but lower than that of IVW, both large-cap growth ETFs.

It may be argued that the above analyses and comparisons did not account for the core investment principles of the fund, which are the main characteristic that sets it apart from its peers. However, as the article states

While the fund strategy is aimed at the approximately three million Muslims in the U.S., a third of whom are observant, only 15% to 20% of the fund’s client base is Muslim.

In conclusion, over typical analysis periods the Amana Growth Fund failed to add value with respect to its reference ETF portfolios of comparable volatility. Despite its ultra-low turnover, the fund had significant distributions in the last three calendar years, e.g. almost 7% of the NAV in 2015. This made it less suitable for taxable investment accounts.

To learn more about the Amana Growth and other mutual funds, please register on our website.

This week’s profile in Barron’s features the PNC Multi-Factor Small Cap Core Fund (PLOAX; Class A shares). This $232 million small-cap fund has a 1.15% net expense ratio (after a contractual waiver through September 2017) and 77% turnover. According to the article

The fund […] won the Lipper award for small-cap core funds for 2015 and 2016, and has handily beaten the Russell 2000 index over the three-, five-, and 10-year trailing periods. It’s up an average of 16.6% a year over the past five years.

The prospectus benchmark for the fund is the Russell 2000® Index. One of the long-lived and low-cost implementations of this index is the iShares Russell 2000 ETF (IWM). Alpholio™ calculations indicate that from November 2005 through September 2016, the fund returned more than the ETF in about 56% of all rolling 36-month periods, 58% of 24-month periods and 61% of 12-month periods. The median cumulative (not annualized) outperformance over a rolling 36-month period was 7.5%.

A rolling return comparison shows the average relative performance of the fund over typical holding periods. However, it does not take the fund’s volatility or exposures into account. To gain insight into the latter aspects, let’s employ the simplest variant of Alpholio™’s patented methodology. This approach constructs a reference ETF portfolio with fixed membership and weights such that it most closely tracks periodic returns of the fund (to learn more, please visit our FAQ).

In the following analyses, the membership of each reference portfolio was capped at five ETFs. Here is the resulting chart with statistics of the cumulative RealAlpha™ for the PNC Multi-Factor Small Cap Core over the ten-year period through September 2016:

Despite a strong rebound in 2012-13, the fund failed to outperform its reference ETF portfolio of comparable volatility. The RealBeta™ of the fund was above that of a broad-based equity ETF.

The following chart with related statistics shows the composition of the reference ETF portfolio for the fund over the same ten-year period:

Over the most recent ten-year period, the fund returned less than either ETF. Despite smaller standard and downside deviations, the fund had lower Sharpe and Sortino ratios than IJT. The average correlation of rolling 36-month returns of the fund and either ETF was approximately 0.97.

In sum, the PNC Multi-Factor Small Cap Core Fund significantly outperformed its reference ETF portfolios only over a relatively short period of time in its history. Despite the word “core” in its name, the fund should have used a small-cap growth instead of a more general small-cap index as its benchmark. Over the past five years, the fund’s distributions were moderate, which made it suitable for taxable accounts. However, a steep front load diminished the fund’s attractiveness.

To learn more about the PNC Multi-Factor Small Cap Core and other mutual funds, please register on our website.

A piece in the most recent WSJ Funds & ETFs Report covers the MFS Global Equity Fund (MWEFX; Class A shares). This $2.4 billion global large-cap growth fund has a 5.75% maximum sales charge, a competitive 1.22% expense ratio and a low 8% turnover. According to the article

MFS Global Equity has outperformed the average global-stock fund over the past five, 10 and 15 years.

It should be noted that the long-term lead manager of the fund announced his retirement within one to two years. This may affect the fund’s future performance, although its other two co-managers will remain. Given the relatively short tenures of these co-managers, the following analyses will focus on three- and five-year periods through August 2016.

The fund’s primary prospectus benchmark is the MSCI World Index. The only available ETF that tracks this index, the iShares MSCI World ETF (URTH), had an inception date in January 10, 2012. Despite its limited history, the ETF may serve as a real-life benchmark for the fund. Alpholio™ calculations indicate that through August 2016, the fund returned more than the ETF in 95% of all rolling 36-month periods, 88% of 24-month periods and 68% of 12-month periods. The median cumulative (not annualized) outperformance of the fund over a rolling 36-month period was 3.14%.

A comparison of rolling returns provides limited insights into a fund’s performance because it does not take into account exposures or volatility. Alpholio™’s patented methodology addresses these shortcomings. The simplest variant of the methodology constructs a custom reference ETF portfolio with both fixed membership and weights. The reference portfolio most closely tracks periodic returns of the fund.

Here is a resulting chart with related statistics of the cumulative RealAlpha™ for the MFS Global Equity (to learn more about this and other performance measures, please visit our FAQ):

Over the five-year period, the fund added very little value over its reference ETF portfolio of comparable volatility. The fund’s RealBeta™, measured against a broad-based domestic equity ETF, was slightly higher than one.

The following chart with associated statistics shows the constant composition of the reference ETF portfolio for the fund over the same analysis period:

The final chart depicts the total return with conventional statistics for the fund and its benchmark-implementing ETF over the three-year period:

The correlation between monthly returns of the fund and the ETF over the same period was 0.97.

Over the recent three- and five-year periods, the MFS Global Equity Fund added little to no value over its reference ETF portfolios. The fund’s steep front load further detracted from its appeal. Despite the modest turnover, in three out of five past calendar years the fund distributed both long- and short-term capital gains, which made it less suitable for taxable accounts.

To learn more about the MFS Global Equity and other mutual funds, please register on our website.

This week’s profile in Barron’s features the Conestoga Small Cap Fund (CCASX; Investor Class shares). This $838 million small-cap growth fund has a 1.10% net expense ratio (after a 0.40% “expense limitation” currently in effect through January 2017) and a low 12% turnover. According to the article

Over the past decade, it has posted 9.2% average annual gains, better than 92% of small growth funds tracked by Morningstar. Meanwhile, its beta, which is a measure of market sensitivity, is just 0.78 against the Russell 2000 Growth index, based on quarterly data since inception.

One of the long-lived and efficient implementations of the first index is the iShares Russell 2000 ETF (IWM). Alpholio™ calculations show that over the ten years through July 2016 the fund returned more than the ETF in approximately 78% of all rolling 36-month periods, 64% of 24-month periods and 63% of 12-month periods. The median cumulative (not annualized) outperformance of the fund was about 7.2%, while the mean was 4.8%, suggesting a left skew.

A reference implementation of the secondary benchmark is the iShares Russell 2000 Growth ETF (IWO). Alpholio™ calculations indicate that over the same evaluation interval, the fund returned more than this ETF in about 61% of all rolling 36-month periods (median cumulative outperformance of 2.1%), 59% of 24-month periods and 51% of 12-month periods.

Rolling returns of both ETFs had a high correlation with those of the fund, as shown in the following chart and statistics:

A mere comparison of returns does not account for volatility or factor exposure of the fund. To gain insight into the latter, let’s employ Alpholio™’s patented methodology (see FAQ). The simplest variant of this methodology constructs a reference ETF portfolio with both fixed membership and weights that most closely tracks the fund. Here is the resulting chart with statistics of cumulative RealAlpha™ for the Conestoga Small Cap Fund:

Over the five-year period through July 2016, the fund did not add any value compared to its reference ETF portfolio. The cumulative RealAlpha™ curve had three distinct phases: largely flat from August 2011 through December 2013, a significant decline from January 2014 through January 2015, and largely flat again afterwards. Indeed, in calendar 2014 the fund returned a negative 8.05% compared to 5.03% for IWM and 5.86% for IWO. At 1.08, the RealBeta™ of the fund, measured against a broad-based stock market ETF, was significantly higher than the figure quoted in the article (see above).

The following chart with related statistics depicts the constant composition of the reference ETF portfolio for the fund over the same evaluation period:

Given the predominance of IJT in the above reference ETF portfolios, it may also be instructive to review the total return chart with related statistics for this ETF and the fund:

The ETF had a larger annualized return, smaller standard deviation and, consequently, higher Sharpe and Sortino ratios, than the fund.

In sum, over the three- and five-year periods through July 2016, the Conestoga Small Cap Fund subtracted a substantial amount of value compared to its respective reference ETF portfolios. The fund could easily have been substituted, and with better results, by a small collection of ETFs. In addition, despite its modest turnover, the fund had considerable capital gain distributions in 2011, 2013 and 2015, which made it less suitable for taxable accounts.

To learn more about the Conestoga Small Cap Fund and other mutual funds, please register on our website.

A recent piece in Barron’s features the T. Rowe Price Dividend Growth Fund (PRDGX). This $5.9 billion no-load fund sports a competitive 0.64% expense ratio and 25% turnover. According to the article, the fund

…has outperformed the Standard & Poor’s 500 index year to date and over one-, three-, 10-, and 15-year periods. So far this year, it has returned 10.21%, versus 8.4% for the S&P 500.

Unlike our previous analysis, which covered a longer-term performance of the fund, this evaluation will generally focus on a recent shorter time period.

The prospectus benchmark for the fund is the S&P 500® Index. One of the long-lived and efficient implementations of this index is the SPDR® S&P 500® ETF (SPY). Alpholio™’s calculations indicate that over the five-year interval through July 2016, the fund returned more than the ETF in only 16% of all rolling 36-month periods, 22% of 24-month periods and 47% of 12-month periods. The median cumulative (not annualized) return difference over a rolling 36-month period was minus 3%.

To adjust for the fund’s volatility, let’s employ the simplest variant of Alpholio™’s patented methodology. In this approach, a reference portfolio of ETFs with fixed both membership and weights is constructed such that its returns most closely track those of the fund. Here is the resulting chart and statistics of the cumulative RealAlpha™ for the T. Rowe Price Dividend Growth (to learn more about this and other performance measures, please visit our FAQ):

Over the five years through July 2016, the fund subtracted value on a risk-adjusted basis. The fund’s volatility, measured as a standard deviation of monthly returns, was comparable to that of the reference ETF portfolio. The RealBeta™ of the fund was slightly lower than that of a broad-based equity ETF.

The following chart with related statistics shows the constant composition of the reference ETF portfolio over the same analysis period:

Over the three-year period through July 2016, the fund still failed to add a meaningful amount of value over its reference ETF portfolio:

The composition of the reference portfolio over this shorter period was different from the previous one, although the top-six equivalent positions also accounted for more than 80% of holdings.

Over the most recent three and five years, the T. Rowe Price Dividend Growth Fund failed to add a significant amount of value when compared to a static reference ETF portfolio. Similarly to 2014, the fund had a substantial long-term capital gain distributions in 2015, which diminished its suitability for taxable accounts. The relatively low expense ratio and modest turnover work in the fund’s favor.

To learn more about the T. Rowe Price Dividend Growth and other mutual funds, please register on our website.

Year to date [the fund] has returned 6.5%, beating the 1.2% for the Standard & Poor’s 500 index, and the 5.7% for its benchmark, the Russell 1000 Growth Index. The fund has beaten 93% of its large-cap growth peers in the past five- and 10-year periods.

The current manager took over the fund at the beginning of July 2009, so that date will serve as a starting point for our further analyses. The prospectus benchmark for the fund is the Russell 1000® Growth Index. One of the low-cost implementations of this index is the iShares Russell 1000 Growth ETF (IWF). Alpholio™’s calculations show that the fund returned more than the ETF in approximately 88% of all rolling 36-month periods, 65% of 24-month periods and 71% of 12-month periods. The median amount of rolling 36-month outperformance was about 5%.

Comparing only returns does not account for risk. To get a better insight into the fund’s performance, let’s employ a variant of Alpholio™’s patented methodology that constructs a reference portfolio of ETFs with fixed membership but variable weights. This portfolio dynamically tracks the fund’s composition and core exposures over time. Here is the resulting chart of cumulative RealAlpha™ for Fidelity Blue Chip Growth:

The fund produced about 0.7% of the regular and 1.3% of the lag annualized discounted RealAlpha™ (to learn more about this and other performance measures, please visit the FAQ). Most of the positive RealAlpha™ was generated over just one year beginning in the second quarter of 2013. At 15.4%, the fund’s standard deviation was a bit higher than that of its reference ETF portfolio. The fund’s RealBeta™ was around 1.13.

The following chart illustrates changes to ETF weights in the reference portfolio:

Under current management, the Fidelity Blue Chip Growth Fund added a decent amount of value on a truly risk-adjusted basis; however, its outperformance was concentrated in a relatively short period of time. This actively-managed fund’s reasonable expense ratio adds to its appeal. Although consisting mostly of long-term capital gains, the fund’s recent substantial distributions (over 5% of NAV in each of 2013 and 2014) made it less suitable for taxable accounts.

To learn more about the Fidelity Blue Chip Growth Fund and other mutual funds, please register on our website.